The science of Customer Satisfaction – 5 Golden Rules |
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With the economic downturn that followed the 2009 banking crises, attention has shifted towards cost reduction, profitability and growth. Your customer base provides the best source of repeat and new business representing the lowest cost of sale you can ever imagine. However, as we all know, only satisfied customers return to use our services or recommend us to other potential clients. So is Customer Satisfaction a science or an art?
Customer Satisfaction is definitely a science and quite separate to soft skills such as “People Skills”. Most companies or businesses try to set up processes, customer charters, customer care departments, etc. to ensure customer satisfaction and retention. In my view by the time a client is contacting you or instigating your customer care processes, you have already lost the game. Aiming for 100% Customer Satisfaction starts prior to consumption of service or product.
The cynics amongst you might be thinking ‘Come on, you cannot keep all of the people satisfied all of the time’. If you are thinking this, then are you suggesting that we should only aim to satisfy a percentage of our clients? May be 50% or 60%, or some other arbitrary percentage which means the remaining % will be ‘Dissatisfied Customers’. Does this mean your business is actually planning for ‘Customer Dissatisfaction’?
The science of Customer Satisfaction.
The science of Customer Satisfaction is based on a simple equation:
Customer Satisfaction = Supplier Performance - Customer Expectations
This is basic mathematics at work here although this formula hides two significant secrets.
Firstly that customer satisfaction is pre-built in your service or product, because it is based on Customer Expectations. Since your business by the virtue of its marketing activities, marketing language, routes to market, pricing, etc. sends a clear and unmistakable signal to the potential customers, it is you that sets the expectations.
Secondly, you choose your customers by the virtue of the fact that you target a specific market segment. If your business does not have a well defined segment, then you are in serious trouble not least for being unable to hone in on your customer’s expectations. The best way to upset everybody is to try to keep everyone happy, so if this is your marketing strategy you are already in a mess. So given that you do, or you should be targeting a specific segment, then you are preordaining the customer expectations.
So how does this formula help us?
Mathematically this could not be simpler. There are 3 possibilities:
a) Customer Satisfaction = Negative Sum
You have not met the customer expectations i.e., your performance level was below the customer's expectation. You have either set the expectations too high or the base line of the customer expectations was already higher than your capabilities. It follows that your delivery was below PAR. This left the customer expecting more than you could deliver.
b) Customer Satisfaction = 0 Sum
You have met the customer expectations therefore your performance was exactly as the customer expected. You have a satisfied customer.
c) Customer Satisfaction = Positive Number
You have exceeded customer expectation as your performance was beyond their expectations. This means you have a ‘Delighted Customer’, which is probably your best advertising advocate!
Delighted customer is the panacea of customer service, which is more likely to use your service/product again but more importantly they will pass on the good news to other potential clients. We all accept the conventional wisdom that bad news travels 5 times faster as unhappy customers are 5 times more likely to tell others of their poor experience. Have you ever thought how fast “Great” news travels? Delighted customers are more likely to recommend you than just merely satisfied ones. How much more is unknown as nobody has yet done a study on this.
How to set customer expectations?
In essence what this illustrates is that in order to gain customer satisfaction, you should actually engage actively in setting their expectations. More importantly, you should set their expectations at levels that you can meet, or if you are really canny at just below the level you can meet!
Remembering consumer expectations are influenced by price and the marketing wrap around that we surround our product or service. I am not just talking about advertising here; I mean the truly holistic view of marketing (Price, Place, Product, Promotion, etc.). Your marketing is your contract with your clients as you promise both in expressed and implied terms, certain characteristics about your product. In order to set the expectation at the correct level, you must be honest, clear, concise and able to deliver what you promise. So don’t promise your holiday resort enjoys wall-to-wall sunshine all year round, if you darn well know you have incredible storms in January! Everybody knows you are not in charge of the weather but you are in charge of the promises you make. Don’t present your boat as ‘unsinkable’ and then put in the small prints ‘so long as you do not hit an iceberg’ (remember the Titanic?!).
The 5 Golden Rules
1. Honesty is not optional – How many vacations have you heard about that is sold as the ‘Oasis of peace & tranquility’ only to find out you are next to the main motorway. Cars sold to you as the icon of reliability, when they just about make it out of the Dealer Courtyard before they need a workshop visit. Now I am not saying you should advertise the fact your hotel is by the M25/M4 junction right under the Heathrow flight path. What I am saying is do not sell it as the place to have a tranquil romantic getaway! If you haven’t got it, don’t sell it. Resist your marketing departments spin doctoring tendencies. You cannot fool all of the people all of the time.
2. Target or miss the mark – You should target a specific segment or segments. If you do your homework right you should know what they expect and whether you can meet the expectations. Remember the Heathrow hotel above? Being a spit away from Heathrow is a virtue if your customer has to catch a flight on an ungodly hour the next morning. So play to your strengths and focus on the clients needs. You cannot be all things to all men (or women), so you cannot satisfy every expectation.
3. Price – ‘You pay your money & you take your choice’ the old adage goes. Price is an incredibly important signal. The Ryanair School of Marketing argues that no matter what indignities you put your clients through; they will keep using you so long as you are cheap enough! Despite all the moans, groans and bad publicity about their service, Ryanair is a business that is thriving. Passengers in growing numbers are using them and despite the lack of customer care, passengers keep on using them. Why? Because it is cheap! Very cheap. I mean incredibly and impossibly cheap! This doesn’t mean you can get away with murder if you are cheap enough (well almost) but it does illustrate the function that price performs in setting expectations.
4. Do not over promise – Now let’s take Ryanair again (must we?). They do what they say, e.g., ‘they get you from A to B’. They do not have adverts with smiley faces, tranquil check-in desks, executive lounge, beautiful stewardesses fanning you whilst you slumber, or presenting you with gourmet meals, etc. They do not pretend to be anything other than an aluminium tube stuffed full with as many seats as possible, so that you can get to your destination as cheaply as possible. Your expectations are set so incredibly low that just getting to your destination is seen as a near miracle achievement. So RyanAir is the living proof that you should only ever promise what you can or are prepared to deliver. This is your contract with the consumer.
5. Manage your own expectations – Entrepreneurs that own their own business have been accused of having dreamy-eyed and unrealistic views of their businesses operational capabilities. This is rather unfair as delusion of grandeur does not uniquely afflict Entrepreneurs. I will illustrate this by sharing a factual story with you. To protect the innocent (and of course to protect against getting sued!) I will not name the company, but they know who they are! Many years ago my team secured a major contract to supply one of the top UK banks with call centres (you know the ones everyone hates!). This was a massive Multi-million-pound contract, which delivered major savings to the bank by regionally centralising their call handling. There was a major uproar from their customers due to call waiting times. Customers had no other option than calling the call centres as the branch numbers were diverted to the regional call centres. Their Chairman appeared in the morning TV programme to explain the benefits and the rational (good PR), which was not just about cost saving but it genuinely provided more efficient service if only you could get through! Under pressure from the TV interviewer he made a rash promise that he will ensure calls are answered within 3 rings (media training required here). After nearly choking on my morning coffee, I had to call his Head of IT and asked him if he had seen his boss on the TV. The answer was a long groan ‘Ah yes!!’. I suggested may be we should set up a meeting with the Chairman, so that we could explain the exact size of the army they needed to employ to achieve such a feat, which in turn would wipe out all the cost savings they had made to date plus the additional costs on top. We did manage to reduce the wait time and keep their customers happy, without having to employ a workforce the size of the Chinese Red Army. So, before you make rash promises, make sure they are deliverable and make sure everyone from the top to the bottom of the company understands the limits of your operational capabilities.
If you are obsessed with customer satisfaction (you should be), then contact us to see what we can do for your business. If you need Media Training, contact someone else!
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About the Author:
Ali Zartash-Lloyd is Managing Partner at Cognisant Associates a business consulting partnership. He is a management graduate from the University of Leicester and was European Director for major US and Korean multi-nationals for over a decade. |
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